First Deal In the Philadelphia Area
Hi All,
This is my first post and first deal on my own. I am 25 years old and my business partner and I had our offer accepted today for a duplex (2 beds, 1 bath each) in Northern Liberties, Philadelphia where we plan to house hack (live in the bottom unit and continue to rent out the top unit that is currently occupied). The asking price of the property is $505k and due to a few additional offers from other parties, we offered $510k with a 3% seller assist. My father is in construction and believes that there are significant renovations to be made to the exterior walls of the property along with interior updates to the kitchen / bathroom for both units. We have a few questions that we would love to have a discussion around...
1. How stringent should we be during the inspection process / how should we think about price negotiations during this process? (Understand, this is an open ended question but curious if we should walk away from the deal if seller doesn't budge during this)
2. What type of liability protection is best for a partnership like ours? We do not have an LLC as we would have had to put 20% down if we had bought it with a LLC attached. Can we still get an LLC after the property is purchased to protect us?
3. How should we view renovation schedule? Attack interior updates first to increase value of rents or fix exterior issues that could costs 40k or more?
4. Does anyone have recommendations for contractors/subcontractors in the Philadelphia area?
5. Are we missing anything that we should be thinking about during the closing process?
Thank you,
Kevin McCarthy
505k sounds really high for a duplex. To what extent have you analyzed this deal? Are your rents equally high? Im guessing you'd need rents close to 3k/mo to cash flow. Has your lender preapproved these numbers?
Yes, you can transfer to an LLC later, IF your lender allows it, but there will be transfer fees and taxes.
Be as stringent as you can during negotiations; question everything, assume nothing. Remember, it is always your choice to accept issues or walk away. Again, this is a super costly property. Dont get distracted by the excitement of the deal.
If you can get one unit fixed and rented first, that would get some cash flowing. The address the second, then the exterior. That is IF the exterior doesnt detract from your rent value.
So much more to discuss! But the numbers truly concern me. Feel free to message me privately for a bit more info. I'm a mom to 3 your age, so I'm compelled to look out for you!